Tag: coronavirus

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Brandon Blog Post

CPP PREMIUMS: A SIMPLE (BUT COMPLETE) GUIDE TO 2021 HOW INCREASED CPP PREMIUMS ARE HITTING WORKERS

cpp premiums
cpp premiums

The Ira Smith Trustee Team hopes that you and your family had a restful holiday season and that you are all safe, healthy and secure.

Ira Smith Trustee & Receiver Inc. is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.

If you would prefer to listen to an audio version of this CPP premiums Brandon Blog, please scroll to the bottom and click on the podcast.

CPP premiums introduction

Everyone who is an employee or is self-employed must make Canada Pension Plan (CPP) payments. The payments you make are your CPP premiums. Employers also must contribute to the CPP. If you are self-employed, then the CPP premiums you must pay each year are calculated as part of your annual income tax return filing.

In this blog, I discuss how the Canadian Government has already given a nasty surprise to Canadians for 2021. The planned increase in CPP premiums on January 1 hit some workers for their 2021 CPP contributions more than others because of the coronavirus pandemic.

The Canada Pension Plan and CPP premiums

The Canada Pension Plan (CPP) is a government-run pension plan for retired Canadians. It provides a monthly taxed retirement pension benefit that replaces part of your income when you retire. Under the CPP, you obtain the CPP retirement pension plan payments for the rest of your life. To qualify you must:

  • be least 60 years old;
  • have actually made a contribution to the CPP;

Valid contributions can be either from work you carried out in Canada or as the outcome of getting credits from a former spouse or former common-law spouse at the end of the relationship.

CPP premiums and annual maximum pensionable earnings bump-up

For this 2021 year, the earnings ceiling, called the yearly maximum pensionable earnings (YMPE), was supposed to be $60,200, an increase of $1,500 from the 2020 limit. However, the actual amount is higher at $61,600. The maximum annual employee and employer contribution amount is $3,166.45 (up from $2,898.00 in 2020). The maximum annual self-employed contribution level is now $6,332.90 (up from $5,796.00 in 2020).

Provincial finance ministers quietly prodded Finance Minister Chrystia Freeland to put a pause on planned increases in premiums workers and businesses pay into the CPP. So did various business groups. They did not feel it was appropriate this year to have the contribution rate go up. Notwithstanding the support of business groups and each province, it was to no avail.

The originally planned increase on January 1 belongs to a multi-year plan accepted by each province and the Canadian government four years ago. They agreed to improve retired life benefits through the CPP by boosting contributions over time slowly.

The very first bump was in 2019. The province finance ministers asked Finance Minister Freeland to put a pause on this year’s automatic increase. They cited the damage done to workers and businesses as a result of the COVID-19 pandemic. They said it isn’t a smart financial decision to take more off workers’ paycheques and also to charge businesses a lot more when so many continue to have a hard time.

cpp premiums
cpp premiums

Moratorium on CPP premiums increase requested by provinces and business groups

So many provincial finance ministers on a call with Finance Minister Freeland, and various business groups independently, asked her to put a pause on this year’s planned increase in CPP premiums and the contribution rate because of the COVID-19 pandemic.

The pandemic’s effect on the labour market, which has some groups noting the impact will be felt by some workers more than others. The plan requires contributions to go up alongside the upper limit on earnings that are subject to those premiums. As I have already stated, the YMPE was supposed to be $60,200. This would have meant tax increases of $1,500 from the 2020 limit. But the actual amount is going to be higher at $61,600.

The reason is due to the pandemic’s impact on the labour market and how the YMPE is calculated. Here are the details. The formula to calculate the earnings limit relies on rises in the average weekly earnings for the 12 months finishing June 30, contrasted to the same amount during the preceding 12-month time period. Over the time of the pandemic, average weekly earnings have increased, but not because workers are making more.

Dan Kelly, president of the Canadian Federation of Independent Business said:

“That’s going to be hundreds of dollars of new CPP premiums out of paycheques of middle-income Canadians not because they got a raise, but because the formula has not had a COVID adjustment,” Kelly says. Nevertheless, the government will collect more money than it originally planned through CPP premiums.

Any type of modifications to contribution rates or the YMPE would require the authorization of Parliament as well as seven provinces representing a minimum of two-thirds of the nationwide population. This is a greater bar than what is required to modify the Constitution!

The federal government response for a moratorium on the CPP premiums increase

Ottawa’s answer was not only to have them go up again but do so more than the scheduled increase. Why? The reason is specifically the calculation in the formula that the Feds and provinces signed up for, well before anyone bothered to know how to spell Wuhan!

Here at the details. The labour market got skewed (no, I did not make a spelling mistake) as job losses have hit the lower-income employees more since March 2020. Therefore, if you reduce the earnings at the lower end of the calculation range, you are left with higher wages, on average, when you do the calculation.

The Canadian government claims that is why the general increase is larger than originally scheduled. Dan Kelly calculates that anybody around the maximum limit will see a 9.3 percent rise in CPP premiums, beyond the approximately five-per-cent premium bump baked into the legislation.

A spokeswoman for Ms. Freeland stated stopping the increases agreed to in 2016 would imply reducing future retirement benefits for Canada’s current workers. The spokeswoman went on to say that the government’s leading concern is supporting Canadians, businesses and business owners who are experiencing economic difficulties as the nation weathers the COVID-19 pandemic. With a 2nd wave underway, lots of people across Canada continue to deal with tremendous unpredictability.

I am not sure what current unpredictability from COVID-19 has to do with freezing CPP premiums for each person and business from an increase for 1 or 2 years has to do with the issue, especially since the effect of freezing the increases will not be affected for decades to come, if at all. Nevertheless, that is what was said.

CPP premiums summary

I hope you enjoyed this CPP premiums Brandon Blog post. If you are concerned because you or your business are dealing with substantial debt challenges and you assume bankruptcy is your only option, call me. It is not your fault that you remain in this way. You have actually been only shown the old ways to try to deal with financial issues. These old ways do not work anymore. The Ira Smith Team utilizes new modern-day ways to get you out of your debt difficulties while avoiding bankruptcy. We can get you the relief you need and so deserve.

The tension put upon you is big. We know your discomfort factors. We will check out your entire situation and design a new approach that is as unique as you and your problems; financial and emotional. We will take the weight off of your shoulders and blow away the dark cloud hanging over you. We will design a debt settlement strategy for you. We know that we can help you now.

We understand that people and businesses facing financial issues need a realistic lifeline. There is no “one solution fits all” method with the Ira Smith Team. Not everyone has to file bankruptcy in Canada. The majority of our clients never do. We help many people and companies stay clear of bankruptcy.

That is why we can establish a new restructuring procedure just for you. It will be as one-of-a-kind as the economic issues and discomfort you are encountering. If any one of this seems familiar to you and you are serious about getting the solution you need, contact the Ira Smith Trustee & Receiver Inc. group today.

Call us now for a no-cost consultation.

We will get you or your business back up driving to healthy and balanced trouble-free operations and get rid of the discomfort factors in your life, Starting Over, Starting Now.

The Ira Smith Trustee Team hopes that you and your family had a restful holiday season and that you are all safe, healthy and secure.

Ira Smith Trustee & Receiver Inc. is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.

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Brandon Blog Post

THE I NEED FINANCIAL HELP IMMEDIATELY CANADA PLAN TO BECOME FINANCIALLY STRONG

The Ira Smith Trustee Team is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.

We hope that you and your family are safe and healthy. For those that celebrate it, we wish you all a very Merry Christmas. To everyone, we wish you a healthy, happy and secure 2021.

I need financial help immediately Canada introduction

“I need financial help immediately Canada” is something we have heard daily as a result of the COVID-19 pandemic. Many have either lost their jobs entirely or have had their hours cut back dramatically. Canadians have been battling to make ends meet daily. It is therefore not a shock that individuals have been looking for financial assistance from the Federal Government throughout and other methods just to say afloat.

Sadly yet at the same time thankfully, the Government of Canada and the Provinces, including where I live, Ontario, acted quickly to provide some emergency financial relief. This Christmas holiday season will be very different for so many individuals in Canada and internationally.

The purpose of this I need financial help immediately Canada Brandon’s Blog is to look at where we have come from so far from the onset of COVID 19 so far in Canada and what financial assistance programs remain for individuals in Canada in the weeks and months ahead for 2021.

I need financial help immediately Canada: A review of 2020 emergency benefits for individuals

Canada Emergency Response Benefit (CERB)

The main program for individuals saying “I need financial help immediately Canada” was the CERB, which is now closed. CERB payments cannot be released after December 31, 2020. The application window for retroactive CERB applications closed on December 2. Applications need to be authorized by today in order for the funds to be paid out in time.

This coronavirus induced support program has helped millions of individuals with income support payments in 2020. The most recent published Federal Government statistics are only as of October 4, 2020. That information published by the Government of Canda indicates that:

  • 27.57 million applications were submitted
  • $81.64 billion was paid out to provide financial assistance

The final numbers are not in yet, but it is clear that over $100 billion will have been paid out in CERB monthly payments.

CERB and the self-employed

In previous blogs, I provided a summary of who was eligible for CERB payments. You will also recall the ongoing snafu that occurred to self-employed people in what the Canada Revenue Agency (CRA) claims that they misinterpreted the minimum income requirements. I explained that whole kerfuffle in my recent blog “CERB REQUIREMENTS: ASTONISHING MIXUP UNDERSTANDING CERB REQUIREMENTS LEADS TO A BAD OUTCOME“.

I notice that even right now, the Government of Canada website shows:

“The Benefit is available to workers:……

Who had employment and/or self-employment income of at least $5,000 in 2019 or in the 12 months prior to the date of their application;…”

So the Federal Government’s own website still shows a misleading description of which self-employed individuals were eligible for CERB. If the interpretation is really “net income” as CRA contends, shouldn’t their own website say that? Self-employment income is a misleading term. “Self-employment net income” is a standard accounting term and is what CRA says it meant.

It is unfortunate that the self-employed who are screaming to our Federal politicians “I need financial help immediately Canada” cannot rely on the plain English words on the government’s own website.

CERB was part of Canada’s coronavirus economic response plan. Additional financial assistance was given to individuals by the Government of Canada in the form of:

Employment insurance program

Temporary modifications to the employment insurance program (EI) to better support Canadians who require financial aid. Since September 27, 2020, the minimum payment is $500 weekly on a gross basis (before income tax).

Canada Recovery Sickness Benefit (CRSB)

The CRSB gives $500 each week for as much as 2 weeks, for employees that:

  • Are not able to work for a minimum of 50% of the week due to the fact that they have gotten ill with coronavirus.
  • Are self-isolated for reasons connected to the coronavirus.
  • Have underlying conditions, are going through treatments or have acquired other sicknesses that, in the viewpoint of a medical practitioner, nurse practitioner, individual in authority, government or public health authority, would make them more prone to contracting the coronavirus.

Canada Recovery Caregiving Benefit (CRCB)

The CRCB offers $500 weekly for up to 26 weeks per household for employees:

  • Incapable of working at least 50% of the week since they are parents with children who need to care for a youngster under the age of 12 or family member since schools, day-cares or care facilities are shut because of the coronavirus since the child or member of the family is sick and/or required to quarantine or goes to high danger of severe illness because of the coronavirus.

Mortgage payment deferral

Most mortgage deferral programs have now ended. House owners who said I need financial help immediately Canada, who needed a time out from making their mortgage payments, might have qualified for a mortgage payment deferral.

The deferral was an agreement between the borrower and the banks or other mortgage lenders. I described the program in more detail in my blog “MORTGAGE DEFERRAL CANADA IS ENDING: 3 KILLER WAYS TO DEAL WITH COVID-19 RELATED MONEY PROBLEMS“.

These were the programs to help the average Canadian feeling the pinch and saying “I need financial help immediately Canada” because of the Covid 19 pandemic.

i need financial help immediately canada
i need financial help immediately canada

I need financial help immediately Canada: A review of 2020 emergency benefits for businesses

Canadian small businesses have no doubt been hit the hardest in this Covid 19 mess. Provinces and regions within provinces have had differing approaches in severity, but they have all involved lockdowns. Due to the variety of goods sold in some big box stores, they have been allowed to stay open while specialty small retailers who spent money on making sure they abided by all Covid 19 protocols had to shut down. This has been especially hard on small retailers during the holiday retail shopping season.

There were several programs paying various amounts available as support for businesses. In no particular order, the main Government of Canada support programs for businesses are:

Canada Emergency Wage Subsidy (CEWS)

The Federal Government is paying up to 75% of employees’ salaries for qualifying eligible employers, with this CEWS subsidy rate now running until June 2021. The CEWS wage subsidy allows businesses to maintain and also re-hire staff members and hopefully stay clear of having to lay off employees.

Canada Emergency Business Account (CEBA) interest-free loans

The CEBA supplied an original amount of $40,000 in interest-free loans, to small businesses and not-for-profits. This program is to help support small businesses that have seen revenue drops because of the coronavirus yet face continuously fixed costs.

The government has just recently increased CEBA to consist of an additional interest-free $20,000 funding, raising the maximum amount to $60,000. If paid off by December 31, 2022, the amount of $20,000 is forgiven. If not, interest begins being charged on the full amount.

Businesses have until March 31, 2021, to apply for the $60,000 CEBA loan or the $20,000 increase. Applications are made to the banks or credit unions with which the business maintains one or more business accounts.

Canada Emergency Commercial Rent Assistance Program (CERC)

On Friday, April 24, Prime Minister Justin Trudeau revealed the launch of the CERC for small businesses that were strongly affected by the coronavirus pandemic and the resultant first lockdown. It was developed to reduce premises rent costs by 75 percent for affected local businesses.

The CERC was supposed to provide forgivable loans for commercial landlords that qualify under the strategy to cover half of the three normal monthly rent payments. It was designed to assist local businesses experiencing financial difficulties throughout April, May and June 2020.

The expense and monitoring of the CERC were shared by the provinces and the feds. So in Ontario, the Ontario provincial government and the Canadian Government were to share equally. Unfortunately, the program, like many of the others, had to be created very quickly. Although commercial tenants wanted this relief, the program was largely unsuccessful due to many uncooperative commercial landlords.

Canada Emergency Rent Subsidy (CERS)

As a result of this and businesses still clamouring “I need financial help immediately Canada“, the CERS program came into being replacing the CERC.

The CERS supplies a direct and easy-to-access rental cost and mortgage aid of approximately 65% of eligible expenditures to qualifying services, charities and non-profits. The aid prices hold up until December 19, 2020. This support is offered straight to lessees.

Lockdown Support

Businesses that have been substantially limited by a required public health order issued by a qualifying public health authority are truly screaming “I need financial help immediately Canada” and for good reason. They can obtain an added 25% of rental assistance via the Lockdown Support.

The consolidated impact of the rental cost subsidy and the Lockdown Support is that hard-hit companies, non-profits and charities subject to a lockdown can receive commercial rent assistance of a maximum of 90%.

The CERS and the Lockdown Support are both offered for businesses until June 2021.

Loan Guarantee for Small and Medium-Sized Enterprises

Through the Business Credit Availability Program, Export Development Canada (EDC) is dealing with banks and other financial institutions for this emergency loan program. The EDC will guarantee 80% of brand-new operating credit as well as term loans of as much as $6.25 million to both small and medium-sized businesses (SMEs).

This funding assistance is to be made use of for operational expenses as well as is available to both exporters and non-exporting firms.

This program is currently readily available at different banks and credit unions. This support is offered until June 2021.

Canada United Small Business Relief Fund

The Canada United Small Business Relief Fund gives grants of up to $5,000 to local businesses. These funds can be utilized for eligible expenses of particular initiatives: buying PPE, refurbishing physical rooms, or developing your website or e-commerce abilities.

These are the main programs for Canadian businesses saying to Ottawa “I need financial help immediately Canada” due to difficulties brought on by Covid 19.

I need financial help immediately Canada: 2021 emergency measures for individuals and businesses

Now that I have reviewed the 2020 programs, some of which are continuing, I want to highlight the help for financial hardship that is still available in 2021 for the many who are still saying to Ottawa “I need financial help immediately Canada“. I caution that the information is as of the date of Brandon’s Blog. Any changes, additions or cancellations of or to support programs due to the Covid 19 crisis are not reflected.

I need financial help immediately Canada – Individuals

Canadians who still say to our federal politicians “I need financial help immediately Canada” can still avail themselves of several programs. The first is the Canada Recovery Benefit Fund (CRB). The CRB essentially replaces the CERB.

The CRB gives $500 weekly for no more than 26 weeks as a Covid 19 response. It is for people that have quit working or had their income lowered by at least 50% because of the coronavirus, and that are not qualified for Employment Insurance Benefits.

The main remaining programs available to individuals saying in 2021 “I need financial help immediately Canada“, are:

  • EI
  • CRSB
  • CRCB

I need financial help immediately Canada – Small Businesses

The main remaining emergency federal support programs for small businesses still saying “I need financial help immediately Canada” are the CEWS, CEBA and the CERS. They are all explained above.

I need financial help immediately Canada summary

I hope that you have enjoyed this I need financial help immediately Canada Brandon’s Blog. The COVID-19 pandemic has brought health damage and financial concerns to many Canadians.

The Canadian government quickly invoked many new financial support programs for both Canadian companies and individuals to try to lessen the financial strain and bring peace of mind to many.

For all the various glitches, the Federal Government has done a very decent job in rolling out these economic support measures to try to keep the Canadian economy going.

At the same time, our front-line health care workers have been heroes. They fight daily to keep all of us safe. We owe them a great deal of gratitude.

If you are worried because you are facing significant financial challenges and you don’t fully understand the options available to you, including, filing a consumer proposal versus bankruptcy. It is not your fault that you are in this situation. You have been only shown the old ways that do not work anymore.

The Ira Smith Team uses new modern ways to get you out of your debt troubles while avoiding bankruptcy. We can get you debt relief freedom.

Ira Smith Trustee & Receiver Inc. offers a full range of insolvency services to people facing a financial crisis. Whether you need help with a proposal to your creditors to avoid the worst case, financial counselling or advice about insolvency options, our goal is to make sure that you understand the process, your choices, and what steps will get your life back on track.

Call us for your free first consultation. We will inform you about all the choices readily available so you can make a proper decision about the very best plan to deal with your financial obligations.

Call Ira Smith Trustee & Receiver Inc. today. All you have to lose is your debt!

We will get you or your company back on the road to healthy stress-free operations and recover from the pain points in your life, Starting Over, Starting Now.

The Ira Smith Trustee Team is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.

We hope that you and your family are safe and healthy. For those that celebrate it, we wish you all a very Merry Christmas. To everyone, we wish you a healthy, happy and secure 2021.

i need financial help immediately canada
i need financial help immediately canada
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Brandon Blog Post

THE MORTGAGE DEFERRAL PROGRAM IS FINISHED: ARE YOU NOW SUFFERING BADLY?

The Ira Smith Trustee Team is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting. We hope that you and your family are safe and healthy.

If you would prefer to listen to the audio version of this Brandon’s Blog, please scroll to the bottom and click play on the podcast.

mortgage deferral program
mortgage deferral program

Mortgage deferral program introduction

Better Dwelling, Canada’s largest independent housing news outlet, recently reported that Canadian banks still have over 254,000 mortgage deferral program.

Most mortgage deferral program ended on September 30, 2020. The purpose of this Brandon’s Blog is to discuss what the mortgage deferral program was and since it is over, now what?

What was the mortgage deferral program?

The mortgage deferral program was an agreement between borrowers and their mortgagees, being Canadian banks. It permits mortgagors to delay their home loan payments for a specified amount of time.

After the deferral period ends, they return to making normal home loan payments. Once payments resume, they need to also pay off the home mortgage payments that were put on hold. Your financial institution figures out just how people repay the deferred payments.

Who could apply for the mortgage deferral program?

Financial institutions evaluate the qualification criteria for home loan deferrals on an individual basis. People might have been eligible for the mortgage deferral program if:

  • you, or any person in your household, are out of work as a result of COVID-19; or
  • you, or any person in your family, experienced a considerable reduction in revenue as a result of COVID-19.

What to expect from the mortgage deferral program

A mortgage deferral program does not cancel, get rid of or eliminate any amount owed on your home mortgage. Interest charges also do not stop when on a payment deferral program. At the end of the arrangement, you will have to return to normal payments according to your original amortization schedule.

The interest that hasn’t been paid throughout the deferral period continues to be added to the principal owing on your home loan. This obviously affects the full amount you owe and therefore the amount of total interest you will pay over the life of your mortgage.

Loan repayments are comprised of both interest and principal. The interest accrues daily. When a payment is made, the amount from the total payment needed to pay down interest is allocated that way. The leftover from that monthly payment is applied to pay down the principal balance.

Over time as the primary balance goes down, the amount of interest from each payment becomes less. The way the arithmetic works, means, as less interest is being paid, more of the monthly blended payment is allocated to repaying principal. The more time that passes where the principal balance does not decrease due to the mortgage deferral program the more interest winds up being paid.

What about paying certain fees during the mortgage deferral program period?

Particular charges for either the administration of or for additional products connected with mortgages could not be waived during the mortgage deferral program. Sometimes, people opt for the bank’s additional mortgage life, disability or critical illness insurance policies to cover their mortgage payments in the event of illness or death. The insurance premium is added to the monthly blended mortgage payment.

Likewise, many people pay one-twelfth of their annual property taxes each month added to their normal monthly mortgage payment. The property tax portion is subject to annual adjustment to account for the difference between the estimated annual property taxes and the actual property tax, once known.

These kinds of payments had to continue notwithstanding any mortgage deferral program period.

mortgage deferral program
mortgage deferral program

What can I expect once my mortgage deferral is over?

When the mortgage deferral program is over and routine payments return, you’ll have the option to maintain payments as they were or increase them. If you can, you could also make a round figure payment amount. The aim is to catch up as quickly as possible on the interest that accrued during the mortgage deferral program period.

You can catch up to your pre-deferral amortization without incurring any type of extra charges. As soon as you’re caught up, any additional payments you might make would be based on your mortgage’s terms and conditions concerning making lump sum or pre-payment to your principal balance without incurring a penalty.

The mortgage deferral program has ended: What if I still can’t pay?

Just because the mortgage deferral program has ended, it does not necessarily mean that everyone can afford to go back to making normal mortgage payments. The coronavirus pandemic with its business closures and always looming lockdowns has not become easier for many.

People whose financial situation has not become better since the pandemic hit, are frightened. I have checked out some “what to do” short articles about if you are having difficulty making your regular home mortgage payments. Most point readers to looking at how a consumer proposal or bankruptcy might help.

Just so you understand, a consumer proposal or bankruptcy are not designed to help you make mortgage payments. In fact, they may lead to you having to sell your home.

Your mortgagee is a secured creditor, presuming its mortgage security is valid and properly registered. A consumer proposal or bankruptcy is a technique of handling your unsecured creditors. The mortgagee has rights if you default on your home loan whether or not you are involved in an official insolvency process.

If you have way too much financial debt and inadequate income to service all that debt, you may very well need to think about an insolvency filing. Yet it is not a straight answer to your mortgage deferral program finishing.

So in order, below are my 3 top suggestions of what you could do when your home mortgage deferral program finishes and also you believe you will remain in financial trouble.

3 steps you can take if you still have trouble making your mortgage payments

Take a critical look at your family household budget plan

I cannot stress sufficiently just exactly how essential the household budget is to your financial safety and security. A spending plan is a listing of all family earnings and all household expenses. Do it on a month-to-month basis. It allows you to prepare just how you need to spend your cash and if there is anything left over monthly for savings for a reserve or for financial investment.

Rather than money just flying out of your pocketbook, you make intentional choices on where you want your money to go. You’ll never ever question at the end of the month where your money went or search for spare change in your purse or wallet.

So if you already have a home budget that you follow, take a look at it carefully. If you don’t’ have one, prepare it right away. Consider the last 6 months and see what your typical monthly earnings have been and what your typical monthly expenditures were. Note them full blast line by line for both earnings and also costs. Then adjust any line that you think might change in the coming months.

After that have a look at it and see if you are spending less or more than you make. If you are spending more, then you need to reduce particular expenditures, raise your revenue, or a mix of both. Reduce any costs that you can. Get to the point where, as a minimum, you are not spending more than you earn. Ideally, you want to spend less than you earn, on an after-tax basis, so that you can build up an emergency fund in case of, an emergency.

Talk to your banker

Be proactive and get in touch with your banker when you suspect a problem. Let them know that you have an existing family budget plan and it reveals that you may require some help. Tell your banker that with the end of the mortgage deferral program period, you still need help.

Your banker will be impressed that you:

  • have a spending plan that you are tracking; as well as
  • you are being proactive and also not triggering the lender to chase you since you turned up on the computer screen as a late payment.

That already makes you the most liked person in the 10% to 20% of individuals who are experiencing trouble paying their home mortgage. Ideally, your lender will be able to do something for you to help.

Call me

If your spending plan shows that you do not have enough family revenue to pay all the family members’ financial obligations on a regular monthly basis, call me. I will take a look at your family budget plan and perhaps get more financial details from you. After evaluating all of it, I will give you my ideal recommendations to meet your unique economic difficulties.

Remember that this is not your fault. The COVID-19 pandemic and the resulting shutdown of the Canadian economic climate continue to cause trouble for the majority of Canadians.

Mention this blog, and I will not charge you a cent for this assistance. I really want you to prosper.

Mortgage deferral program summary

I hope you have found the mortgage deferral program Brandon’s Blog interesting and helpful. The Ira Smith Team family hopes that you and your family members are remaining secure, healthy and well-balanced. Our hearts go out to every person that has been affected either via misfortune or inconvenience.

We all must help each other to stop the spread of the coronavirus. Social distancing and self-quarantining are sacrifices that are not optional. Families are literally separated from each other. We look forward to the time when life can return to something near to typical and we can all be together once again.

Ira Smith Trustee & Receiver Inc. has constantly used clean, safe and secure ways in our professional firm and we continue to do so.

Income, revenue and cash flow shortages are critical issues facing entrepreneurs, their companies and individual Canadians. This is especially true these days.

If anyone needs our assistance for debt relief Canada COVID-19, or you just need some answers for questions that are bothering you, feel confident that Ira or Brandon can still assist you. Telephone consultations and/or virtual conferences are readily available for anyone feeling the need to discuss their personal or company situation.

The Ira Smith Trustee Team is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting. We hope that you and your family are safe and healthy.

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Brandon Blog Post

FINANCIAL LITERACY MONTH 2020: THE LATEST AND GREATEST NEWS YOU NEED TO KNOW

financial literacy month 2020
financial literacy month 2020

The Ira Smith Trustee Team is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting. We hope that you and your family are safe and healthy.

If you would prefer to listen to the audio version of this financial literacy month 2020 Brandon’s Blog, please scroll to the very bottom and click on the podcast.

Financial literacy month 2020 introduction

November is financial literacy month 2020. This is the 10th anniversary of financial literacy month in Canada.

Throughout financial literacy month, the Financial Consumer Agency of Canada (FCAC) engages with Canadians and interact with organizations from the private, public, and charitable sectors to help enhance the financial literacy of people.

For the entire month, organizations from throughout the country are urged to host seminars and share information intended at helping Canadians comprehend their finances and equipping them to manage their money and debt wisely.

In this Brandon’s Blog I discuss the importance of financial literacy and financial literacy month 2020.

Financial literacy month 2020: What is financial literacy?

Financial literacy in Canada means having the skills and knowledge to make educated choices regarding managing your money. Understanding fundamental financial ideas allow individuals to know how to browse the financial system. Individuals with financial literacy abilities make far better monetary choices and handle cash much better than those without these abilities.

Why is financial literacy month 2020 important​?

Regular readers of Brandon’s Blog understand that one of the major reasons I discuss financial and insolvency issues is to assist to reinforce Canadian financial literacy. Especially, exactly how entrepreneurs, their business and people, in general, can much better handle their financial obligations.

The major benefit of financial literacy is that it equips us to make smart financial decisions. It supplies the understanding and skills we need to handle cash properly– budgeting, conserving, loaning, and investing. This suggests that we are far better furnished to reach our financial goals and attain financial security with a greater understanding of money matters.

As the economic market expands and becomes progressively more complicated, it is important that Canadians have the knowledge, abilities and self-confidence to make enlightened decisions about their money, budgeting and debt. Financial literacy is as important today as basic literacy.

Dedicating a financial literacy month 2020 to remind everyone how important financial literacy is, especially this year, is a great idea.

financial literacy month 2020
financial literacy month 2020

Financial literacy month 2020 content being shared

Canadian financial literacy month 2020 is dedicated to and therefore titled: Get Back to Basics! There is an entire calendar of events aimed to help you to update your studies in money matters.

This month, take some time to equip on your own and develop your very own understanding, abilities and confidence in handling money matters to ensure that you can make important financial choices. In these times we are experiencing, being better able to handle money matters is currently more crucial than ever before.

New content started on November 1st. The calendar of events include:

  • Money Basics (Nov 1-7).
  • Lay the foundation for smart financial planning with insights into subjects like financial investments, insurance coverage and retired life preparation Buying Basics (Nov 8-14).
  • The fundamentals of exactly how to be smarter with your money, including details on savings accounts, and all things worldwide of basic personal money planning basics. A broad range of information on how to make smarter purchases – both large and little! Find out more regarding credit reports, consumer debt and mortgages. (Nov 15-21).
  • Life Event Basics. Financial literacy hits you when major life events are involved. Check out the financial impact of events such as getting married, having children, losing a job and when illness strikes (Nov 22-27).

Financial literacy month 2020 aimed at giving you tips and tools to understand your finances

This year, financial literacy month aims to aid Canadians to find out just how to handle their funds in tough times. Keeping track of your money by making a spending plan will help a person to stick to a budget and remain on top of their finances.

Minimize debt: get only what you need. If you should borrow money, understand the cost of debt and have a plan to pay it back. CPA Canada has actually assembled resources to assist manage your financial resources and also provide you with the tools you require throughout this pandemic, during financial literacy month 2020 – and beyond.

Each November, Canadians celebrate financial literacy month. Urge your family members to discover new ways to become extra savvy with their money! Financial literacy month 2020 information even includes financial information for students and financial information for children. There is a plethora of information for all ages, including financial literacy for kids.

And finally, financial literacy month 2020 and the coronavirus

The Chartered Professional Accountants of Canada (CPA Canada) has just publicized its Canadian Finance Study 2020. According to this brand-new nationwide study, one-third of Canadians claim the tension associated with money management has increased due to the COVID-19 pandemic. This is understandable.

Survey participants state their income has been lowered as an outcome of the coronavirus. Thirty percent of participants report that in the early days of the COVID-19 lockdown, their savings rate decreased. However, 55% say that they are spending less as a result of the coronavirus. That is a good thing.

Recent information from Statistics Canada gives insight into the economic behaviour of Canadians during the COVID-19 pandemic. The second quarter of 2020 saw a spike in the savings rate to 28.2%. This is the highest savings rate since 1961!!

COVID-19 has had a clear effect on life worldwide. This further emphasizes the significance for individuals to take preventative measures in managing financial resources in the middle of the pandemic.

Some parents have the ability to keep their children at home to do online learning because they are too nervous about sending them to school. This is an opportunity for parents to add money management skills to your child’s education. The trick is to do projects with your children that teach lessons and skills that you must show them anyhow about money.

There are simple things you can do with very young children during financial literacy month 2020 and beyond, such as:

  • Show them different denominations of coins and bills.
  • Let the children sort through coins into like piles.
  • Let them then count the coins and come up with a total of each pile. Right down each total and then have them add up all the individual amounts into one grand total.
  • Use simple examples to teach your children how to make the change. This teaches them both arithmetic skills and financial skills. They need to know this to manage their lives, so why not do it this month?

I think all parents would feel very good about teaching these money skills to their children. This is much more preferable than leaving it up to the school and hoping that they properly understood the simpler money concepts they will use for their entire life.

Financial literacy month 2020 summary

I hope you have enjoyed this financial literary month 2020 Brandon’s Blog. Hopefully, you have better insight now into the fact that a sick insolvent company’s business can be saved by doing a sale of its assets to a healthy organization.

Do you or your company have too much debt? Are you or your company in need of financial restructuring? The financial restructuring process is complex. The Ira Smith Team understands how to do a complex restructuring. However, more importantly, we understand the needs of the entrepreneur or the person who has too much personal debt.

You are worried because you are facing significant financial challenges. It is not your fault that you are in this situation. You have been only shown the old ways that do not work anymore. The Ira Smith Team uses new modern ways to get you out of your debt troubles while avoiding bankruptcy. We can get you debt relief freedom.

The stress placed upon you is huge. We understand your pain points. We look at your entire situation and devise a strategy that is as unique as you and your problems; financial and emotional. The way we take the load off of your shoulders and devise a debt settlement plan, we know that we can help you.

We know that people facing financial problems need realistic lifeline. There is no “one solution fits all” approach with the Ira Smith Team.

That is why we can develop a restructuring process as unique as the financial problems and pain you are facing. If any of this sounds familiar to you and you are serious in finding a solution, contact the Ira Smith Trustee & Receiver Inc. team today.

Call us now for a free consultation.

We will get you or your company back on the road to healthy stress-free operations and recover from the pain points in your life, Starting Over, Starting Now.

The Ira Smith Trustee Team is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting. We hope that you and your family are safe and healthy.

Categories
Brandon Blog Post

CERB UPDATE: CERB YOUR ENTHUSIASM AS INTENSE CERB CRA AUDITS BEGIN

CERB update

The Ira Smith Trustee Team is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting. We hope that you and your family are safe and healthy.

CERB update introduction

The Canada Emergency Response Benefit (CERB). CERB update: The Canada Revenue Agency (CRA) has started audits to assess payments made under certain of Canada’s COVID-19 Economic Response Plan. After being slowed down by the coronavirus, auditors are now getting back to their complete workload.

This Brandon’s Blog will concentrate on the Government of Canada CERB update.

CERB update: Who can qualify for CERB?

As a refresher, there were eligibility criteria to be eligible for the $2,000 CERB payment by applying to the CRA, you must have met certain conditions during the period you are applying for. The Government of Canada stipulated the eligibility criteria to be:

  • You did not look for, or get, CERB or Employment Insurance benefits from Service Canada for the exact same qualification period.
  • You did not stop your work willingly on your own.
  • You live in Canada and also are at least 15 years old.
  • You earned a minimum of $5,000 (before taxes) in the preceding 12 months, or in 2019, from 1 or more of:
    • employment earnings
    • self-employment income
    • provincial benefit payments connected to pregnancy or parental leave
  • 1of:
    • Your work hrs have actually been minimized because of COVID-19.
    • You have actually quit or will certainly quit working as a result of COVID 19.
    • You are incapable to work as a result of COVID-19, for example, because you are looking after a person.
    • You have actually been paid EI benefits for at the very least one week of benefits since December 29, 2019, and finished your entitlement to such benefits.
  • One of:.
    • If you are applying for the first time: You have actually stopped or will stop working, or you are working minimized hours due to the coronavirus. Also, you don’t expect to earn over $1,000 in gross employment or self-employment revenue for at least 14 days straight during the 4-week duration.
    • If you are looking for a subsequent period: You are still not employed or self-employed, or you are doing reduced hours due to COVID-19. You don’t expect to make over $1,000 in gross employment or self-employment revenue, and you anticipate this to continue during the whole 4-week duration.

One CERB update is that the CERB program has now ended. The CRA is continuing to accept and pay retroactive applications until December 2, 2020.

CERB update: What are the CERB pay periods?

You will see in the above CERB update description, it talks about qualifying for different periods. What were the CERB pay periods? The CERB was available from March 15 to September 27, 2020, inclusive.

The Government of Canada paid out $2,000 per four-week duration for approximately 28 weeks, backdated to March 15. CERB payments were paid out in the gross amount. No deductions for income tax, Canada Pension Plan or Employment Insurance were taken off. CERB is taxable income that must be reported on your 2020 income tax return.

As long as you did not make more than $1,000 for any 4-week period applied for, there was not any CERB claw-back.

So for this CERB update, keep 3 things in mind because it will be important from a CRA audit perspective:

  • You could apply for CERB through either CRA or Service Canada, but not both.
  • There were certain eligibility requirements regarding anyone who applied having reduced work hours or no work due to the coronavirus.
  • You were only allowed to earn $1,000 for any CERB pay period. If you earned more, you were not entitled to apply for the CERB for that pay period or receive payment of CERB.

CERB update: What is replacing CERB?

Now that the CERB has ended, the Government of Canada has created some new benefit programs. These new CERB update programs are retroactive from September 27, 2020, to September 25, 2021, inclusive.

Canada Recovery Benefit (CRB)

The CRB will provide qualified workers with $500 weekly (taxable, and this time tax is deducted) for as much as 26 weeks for those who are not working for an employer or independently as a result of COVID-19.

To qualify, you also must not be eligible for Employment Insurance or had employment/self-employment revenue minimized by a minimum of 50% as a result of the coronavirus.

Canada Recovery Caregiving Benefit (CRCB)

The CRCB will supply $500 each week (taxed, tax deducted from the gross weekly amount) for up to 26 weeks per house. It is for workers incapable of working at least 50% of the week since they must look after a youngster under the age of 12 or a member of the family. The allowed for reasons are since schools, day-cares or treatment centres are closed due to COVID-19, or due to the fact that the youngster or member of the family is sick and/or required to quarantine or is at a high threat of serious health ramifications as a result of COVID-19.

Canada Recovery Sickness Benefit (CRSB)

The CRSB will provide $500 weekly (taxable, and this time tax is deducted) for a maximum of 2 weeks, for workers that are not able to work at the very least 50% of the week because:

  • they acquired COVID-19;
  • self-isolated for factors associated with COVID-19; or
  • have hidden problems, are undertaking therapies or have actually gotten various other sicknesses that, in the opinion of a doctor, nurse practitioner, government or public health authority, would make them much more prone to the coronavirus.

Employment Insurance

If you received the CERB by applying to Service Canada after you got your last CERB amount, continue completing records for Service Canada. For the most part, you do not require to make a special application for EI benefits.

Service Canada will automatically examine your data and your Record of Employment. They will review your case and let you know if you qualify for EI.

If you got the CERB by applying to CRA, you are required to first get all your CERB payments before applying for EI benefits. You can apply after the end of your last CERB eligibility period for the CERB update benefits.

cerb update
CERB update

CERB update: Can CRA audit CERB?

Definitely. They will be looking for two things. People who made an honest mistake in their application and those who committed out and out fraud.

The CRA isn’t going to fool around with these CERB payments. If you made a mistake on your application and therefore got more money than you should have, the CRA will want those funds back.

The Canadian federal government has spent billions on the CERB program. That’s a lot of money calling for accountability. If you do not think the CRA will audit applications, you may want to rethink just how easy auditing is with the CRA computers.

Taxpayers who inaccurately claimed CERB benefits by mistake may just be required to pay back the incorrectly claimed amount. But here is the CERB update – there will be, if there aren’t already, additional procedures to successfully penalize taxpayers who purposefully claimed COVID-19 subsidies they did not qualify for.

These actions will include penalties and interest and possibly prosecution for the, especially more grievous tax fraudsters. COVID-19 benefits or subsidies have come at a significant cost to the government. They will be keeping an eye out for those attempting to abuse the system.

The very best security against flunking an audit where the CRA chooses you is to have taken simple preventative steps. The simplest way to come out clean from a CERB update audit was to make sure that you qualify before applying for the money!

CERB update: What if you can’t (re) pay?

There are going to be three kinds of people that may very well have trouble paying money to the government. People went on the CERB because of very low, or no, employment earnings. Nobody got rich from the CERB. So people are now flush with cash after having received CERB payments.

The first type is those that made an honest error in their applications. If caught through an audit, they may very well not have the funds to repay.

The second type is those that committed fraud in getting the CERB. Perhaps they never qualified but falsely applied. Or, perhaps on the surface they did qualify, and then while receiving the CERB were able to pick up work and got paid in cash.

The third type will be those people who did everything right and needed all the CERB to put food on the table and make their rent or mortgage payment. Remember that CERB is taxable and was paid at the gross amount. No income tax was deducted at the source. So, next winter or spring, when filling out their 2020 income tax return, they may have a nasty surprise. That nasty CERB update surprise will be income tax payable for which they do not have the cash to make the tax payment they are required to.

So now they will have income tax debt to add to credit card debt or other types of debt. These people will need income tax debt relief. CRA will definitely contact you if you do not pay.

If you find that you will be in need of a debt settlement plan to deal with your debts, including any income tax debt, contact a licensed insolvency trustee (Trustee).

A Trustee will review your situation and make specific recommendations on how you can settle your debts. Our aim is always to help people avoid bankruptcy. We have helped many people who have received bad news from a CRA audit. We can also help anyone with a CERB update problem.

CERB update: Summary

I hope you have enjoyed this CERB update Brandon’s Blog. Hopefully, you have better insight now into the fact that a sick insolvent company’s business can be saved by doing a sale of its assets to a healthy organization.

Do you or your company have too much debt? Are you or your company in need of financial restructuring? The financial restructuring process is complex. The Ira Smith Team understands how to do a complex restructuring. However, more importantly, we understand the needs of the entrepreneur or the person who has too much personal debt.

You are worried because you are facing significant financial challenges. It is not your fault that you are in this situation. You have been only shown the old ways that do not work anymore. The Ira Smith Team uses new modern ways to get you out of your debt troubles while avoiding bankruptcy. We can get you debt relief freedom.

The stress placed upon you is huge. We understand your pain points. We look at your entire situation and devise a strategy that is as unique as you and your problems; financial and emotional. The way we take the load off of your shoulders and devise a debt settlement plan, we know that we can help you.

We know that people facing financial problems need a realistic lifeline. There is no “one solution fits all” approach with the Ira Smith Team.

That is why we can develop a restructuring process as unique as the financial problems and pain you are facing. If any of this sounds familiar to you and you are serious in finding a solution, contact the Ira Smith Trustee & Receiver Inc. team today.

Call us now for a free consultation.

We will get you or your company back on the road to healthy stress-free operations and recover from the pain points in your life, Starting Over, Starting Now.

The Ira Smith Trustee Team is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting. We hope that you and your family are safe and healthy.

cerb update
CERB update
Categories
Brandon Blog Post

MORTGAGE DEFERRAL CANADA IS ENDING: 3 KILLER WAYS TO DEAL WITH COVID-19 RELATED MONEY PROBLEMS

The Ira Smith Trustee Team is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting. We hope that you and your family are safe and healthy.

Mortgage deferral Canada introduction

The bulk of the home mortgage deferral Canada that banks have given to Canadians was approved in March and April. This was the time when the COVID-19 pandemic began taking a financial toll on the country with non-essential businesses shuttered and millions unemployed or seeing their earnings take a deep cut.

The Office of the Superintendent of Financial Institutions (OSFI) proposed actions planned to support federally regulated lenders to make sure that they would not experience problems due to the mortgage deferrals provided to help Canadians. The OSFI mortgage deferral help it provided to the lending institutions enhanced the security of the Canadian economic situation and monetary system when faced with obstacles postured by the coronavirus.

The mortgage deferrals are slowly coming to an end. This Brandon’s Blog discusses what you can do if you fear what your personal fallout will be when the mortgage deferrals end.

How did mortgage deferral Canada work for the borrower?

As of July 30, there were approximately $170 billion in mortgage deferments for the biggest 6 banks. The majority were established to unwind by September 30. Mortgage deferral Canada arrangements between Canadians and their financial institutions were truly an individual conversation. The federal government provided a wide overview, yet the specific arrangements between each borrower and lender were established individually as each case required. The significant style was that if a customer was struggling with financial difficulty because of the COVID-19 lockdown, mortgage payments would be deferred for an agreed-on, short-term amount of time.

Currently, these mortgage deferral Canada setups are slowly ending. The chartered banks are reporting that currently, for those whose deferments have ended, 80% to 90% are current in their payments. That means 10% to 20% of people who had a mortgage deferral Canada deal currently cannot maintain their mortgage payments.

How did mortgage deferral Canada work for the lenders?

OSFI told the federally regulated lending institutions and mortgage insurers they can deal with home mortgage financings for which a payment deferment is approved as being current. Payment deferments of as much as 6 months approved prior to August 31 and repayment deferments of up to 3 months approved after August 30 and on or before September 30 that it need not categorize such mortgages as impaired or revamped.

In April OSFI advised lenders that in circumstances where banks provide home mortgage repayment deferrals, those mortgages can continue to be dealt with as performing loans under the . Consequently, OSFI told the banks they did not need to increase their capital resource requirements based upon the home mortgage deferral Canada arrangements they provided. OSFI additionally told the loan providers that it would not assess such mortgage portfolios as having a larger credit risk.

For all federally regulated banks, OSFI specified that it is prepared to use flexibility for any that might need additional time to satisfy upcoming due dates for filing regulatory returns, on a case-by-case basis.

Where mortgages need to be insured due to being high ratio, there are insurance coverage costs that the lending institutions need to make to the insurer each month. OSFI likewise aided the banks and insurers, such as CMHC, by stating that it will not place the lenders or insurers offside when the monthly insurance premiums were not being paid as a result of the mortgage deferral Canada arrangements. OSFI also stated that deferments will not boost capital charges on unpaid premiums. OSFI told insurance providers that they can deal with a mortgage for which a deferment is granted as performing.

So with these OSFI initiatives, lenders can make mortgage deferral Canada happen and both lenders and mortgage insurance providers can treat the mortgages under these deferred home mortgage settlements and mortgage insurance payments, as not being in default.

Mortgage deferral Canada is ending – what can you do if you believe it will cause financial problems for you

OSFI has just stated that any type of mortgage deferral Canada plans past September 30, 2020, will now be subject to OSFI’s typical policies. People who need to start making their mortgage payments once again, but whose economic situation has not improved since the pandemic hit, are scared. I have read some “what to do” articles if you think you will have trouble making your normal mortgage payments. In my view, several have actually missed the mark. Some I have checked out start explaining how a consumer proposal or bankruptcy can help you.

Just so you know, a consumer proposal or bankruptcy cannot help you with the end of your mortgage deferral Canada. The reason it cannot help you is that your mortgage is a secured debt. Your mortgagee is a secured creditor, assuming its mortgage security is valid. A consumer proposal or bankruptcy is a method of dealing with your unsecured creditors. The mortgagee has rights if you default on your mortgage whether or not you are involved in a formal insolvency process. If you have too much debt and too little income to service all that debt, you may very well need to consider an insolvency filing. But it is not a direct answer to your mortgage deferral Canada ending.

mortgage deferral canada
mortgage deferral canada

So in order, here are my 3 top recommendations of what you could do when your mortgage deferral Canada deal with your lender ends and you believe you will be in financial trouble.

  1. Take a critical look at your family household budget

I cannot emphasize enough just how essential the household budget is to your financial security. A spending plan is a listing of all income and your families’ costs. Do it on a monthly basis. It enables you to prepare how you need to spend your money and if there is anything left over each month for savings for an emergency fund or for investment. Rather than cash just flying out of your pocketbook, you make intentional choices on where you want your cash to go. You’ll never need to doubt at the end of the month where your money went or search for a hole in your wallet.

Numerous Canadians panic every month regarding where the cash will come from to pay their bills. A household budget will give you the direction you need. That direction should give you comfort. It reveals to you just how much you make and also what your costs are. If need be you can decrease unneeded costs or possibly tackle extra work to live within a well-balanced budget plan. No extra panicking at the end of the month.

So if you have a household budget that you follow, look at it carefully. If you don’t’ have one, prepare it immediately. Look at the last 6 months and see what your average monthly income has been and what your average monthly expenses were. List them all out line by line for both income and expenses. Then adjust any line that you believe will change in the coming months. Adding your normal monthly mortgage payment is one of those things that will need to be added.

Then take a look at it and see if you are spending less or more than you earn. If you are spending more, then you need to cut back on certain expenses, increase your income, or a combination of both. Take a critical look and slash any expenses that you can. Then see what that looks like.

If you feel that making your normal monthly mortgage payment will not be a problem, then terrific. Just follow your family budget and each month compare your actual to budget. Make any adjustments you need to along the way. However, keep spending less than you earn.

If your budget shows that you are going to have trouble making your normal monthly mortgage payment, then go on to my next step 2.

  1. Speak to your banker

Get ahead of it. Contact your lender. Let them know that you have a current family budget and it shows that you may need added help when your mortgage deferral Canada deal ends. Your banker will be impressed that you:

  • have a current budget that you are tracking; and
  • you are being proactive and not causing the banker to chase you because you came up on the computer screen as a delinquent mortgagor.

That already makes you the most liked person in the 10% to 20% of people who are experiencing problems paying their mortgage. Hopefully, your lender can work something out for you that will help you.

  1. Call me

If your budget shows that you do not have enough family income to pay all the families’ debts on a monthly basis and your lender cannot do anything to help you, then call me. I will take a critical look at your family budget and get more personal financial details from you. After reviewing all of it, I will give you my best recommendations to meet your unique financial challenges. Keep in mind that this is not your fault. The COVID-19 pandemic and the resulting shutdown of the Canadian economy continues to cause problems for the majority of Canadians.

Mention this blog, and I will not charge you a penny for this help. I truly want you to succeed.

Mortgage deferral Canada summary

I hope you have found this mortgage deferral Canada Brandon’s Blog interesting and helpful. The Ira Smith Team family hopes that you and your family members are remaining secure, healthy and well-balanced. Our hearts go out to every person that has been affected either via misfortune or inconvenience.

We all must help each other to stop the spread of the coronavirus. Social distancing and self-quarantining are sacrifices that are not optional. Families are literally separated from each other. We look forward to the time when life can return to something near to typical and we can all be together once again.

Ira Smith Trustee & Receiver Inc. has constantly used clean, safe and secure ways in our professional firm and we continue to do so.

Income, revenue and cash flow shortages are critical issues facing entrepreneurs, their companies and individual Canadians. This is especially true these days.

If anyone needs our assistance for debt relief Canada COVID-19, or you just need some answers for questions that are bothering you, feel confident that Ira or Brandon can still assist you. Telephone consultations and/or virtual conferences are readily available for anyone feeling the need to discuss their personal or company situation.

The Ira Smith Trustee Team is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting. We hope that you and your family are safe and healthy.

mortgage deferral canada
mortgage deferral canada
Categories
Brandon Blog Post

INSOLVENCY CANADA: IS IT ILLEGAL FOR INSOLVENT COMPANY TO APPLY FOR THE CEWS

The Ira Smith Trustee Team is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting. We hope that you and your family are safe, healthy and secure.

If you would prefer to listen to the audio version of this insolvency Canada Brandon’s Blog, please scroll to the bottom and click play on the podcast.

insolvency canada
insolvency canada

Insolvency Canada introduction

Canadian business restructuring, a type of insolvency Canada, has been in the news lately and no doubt will continue to be for some time. The COVID-19 pandemic, the lockdown and general fear have affected everyone; both Canadian business, employees and all other Canadians. Everyone is forecasting that business insolvencies will rise as a result of the coronavirus.

An interesting question posed to us recently is, is it illegal for an insolvency Canada company to apply for the Canada Emergency Wage Subsidy (CEWS). I have written a couple of blogs specifically on the CEWS previously:

In this Brandon’s Blog, I discuss the concept of CEWS and try to answer the question about insolvent companies applying for COVID-19 support.

Insolvency Canada CEWS refresher

The CEWS was established for an initial 12-week period from March 15 to June 6, 2020, offering a 75-per-cent wage help to qualified firms. Then on May 15, 2020, PM Justin Trudeau announced a CEWS expansion for 3 additional months to August 29. The CEWS safeguards work by assisting organizations to maintain workers on the payroll as well as also encouraging firms to re-hire staff members previously laid off. To date, 296,030 employers, representing 924,970 applications, have applied to the CEWS program.

Former Finance Minister Bill Morneau then announced in July that the CEWS extension would consist of program changes that would broaden the reach of the program. It would certainly offer much better-targeted assistance to guarantee that more workers can return to their work without delay as the economy reboots.

The modifications announced in July for the CEWS extension would:

  • Prolong the program up until November 21, 2020, with the intent to provide additional support up until December 19, 2020.
  • Make the aid available to a more variety of companies to include those with a revenue decline of less than 30%.
  • Provide a slowly lowering base help to all eligible companies. This would assist various companies with much less than a 30% earnings loss get aid to keep employees.
  • Present a top-up aid of around an added 25 percent for companies that have really been most adversely affected by the pandemic. This would be particularly practical to firms in markets that are recovering far more slowly.
  • Offer assurance to firms that have really already made business decisions for July as well as August by ensuring they would not have their benefits less than they would have had under the previous CEWS program.
  • Address particular issues brought to the government’s attention by various stakeholder groups.

By helping people get back to work and sustaining companies as they try to grow their income, these modifications gave companies some certainty that they needed to recall workers. It is very possible that some employers would fall into an insolvency Canada category.

Insolvency Canada: The current CEWS statistics

The Canadian government has approved 910,940 of the total applications so far. The approved applications by value are:

Under $100K 863,700

$100K to $1M 44,990

$1M to $5M 2,010

Over $5M 240

Total 940,940

To look at is it illegal for an insolvent company to apply for CEWS, we first need to see what the requirements are. Could it be that applications have been made by insolvency Canada employers? For sure it is!

Insolvency Canada: When is an employer eligible for the CEWS

The CEWS was first set up through the passage of BILL C-14, A second Act respecting certain measures in response to COVID-19. It received Royal Assent on April 11, 2020. It establishes the rules for the CEWS program, as amended and extended.

For the purposes of the wage subsidy, an eligible employer is:

  • a company or a trust, besides a corporation or a trust fund that is excluded from tax obligation under Part I of the Income Tax Act or is a public institution;
  • an individual aside from a trust;
  • a registered charity (other than a public institution);
  • a person that is exempt from tax obligation under Part I of the Income Tax Act (aside from a public institution), that is:
    • a farming organization;
    • a board of trade or a chamber of commerce;
    • a non-profit corporation for SRED activities;
    • a labour organization or society;
    • a benevolent or fraternal benefit society or order; and
    • a non-profit organization;
  • a partnership where each member of which is an individual or partnership in this listing;
  • a prescribed company, including certain Indigenous companies or businesses.

As you can see, the list is very exhaustive. The legislation does not exclude an insolvent company or mention anything about insolvency Canada. The legislation also does not exclude a company that has filed for a corporate restructuring being either a proposal under the Bankruptcy and Insolvency Act (Canada) (BIA) or under the Companies’ Creditors Arrangement Act (Canada) (CCAA).

Insolvency Canada: How does an eligible employer qualify for the wage subsidy?

In order to get the wage subsidy in respect of a specific claim period, an eligible company needed to have on March 15, 2020, an open payroll program account with the CRA and was using that account to make its payroll remittances.

Concerning the revenue test, a company’s income for the subsidy includes its revenue earned in Canada on an arm’s length basis, calculated utilizing the employer’s regular bookkeeping approach. Companies can pick to calculate their earnings using either a cash basis or the accrual technique of bookkeeping. Companies have to make use of the method they select when they first make an application for the CEWS for the duration of the program. Employers cannot combine the methods.

When a qualified employer has computed its qualifying revenue for each and every relevant claim period, it would determine if it has actually experienced the needed reduction in income to qualify for the wage subsidy for that claim period. However, the company is under no obligation to prove that the decrease in income is connected to the COVID-19 situation. If it does not qualify for one claim period, it is not barred from determining if it qualifies for any other claim period.

There is nothing in the legislation that disqualifies an insolvent company that is an eligible employer from calculating if it meets the test for eligibility for the CEWS. The phrase “insolvency Canada” does not appear anywhere.

Insolvency Canada: It is not illegal for an insolvent company to apply for the CEWS

From my research, as described above, I have not found anything in the legislation that established the CEWS that would make it illegal for an insolvency Canada employer to apply for the CEWS. If you think about it, this makes sense.

The Canadian government was worried that companies shutting down meant all workers were laid off and be applying for the Canada Emergency Response Benefit (CERB). As the economy opened up again, the government wanted to make it easier for businesses to bring back some or all of their workers in a very unsettling and uncharted time. The aim of all the Canadian government support programs is to give assistance to struggling companies.

There is an implicit assumption that companies could very well be insolvent and would therefore not be able to reopen unless they had financial support. So not only is it not illegal for an insolvent company to apply for the CEWS, it is quite logical that an insolvent company would not reopen or if it did, not hire back many workers.

This is, in my view, one of the reasons why the CEWS was established; to bring back Canadian workers to companies that could not otherwise afford to pay its employees if it could not receive back a refund for what it was spending on wages or salaries.

Insolvency Canada: How would the CEWS be treated under a formal restructuring

Whether the company is restructuring under the BIA or CCAA, the treatment of the CEWS is the same. The CEWS is taxable. You need to include the amount you get on the company’s or business’s income tax return when calculating your taxed revenue.

You will certainly likewise be expected to report the amount of the CEWS that was used to pay each of your staff members’ incomes by utilizing a unique code in the “other information” area at the end of the respective employee’s T4 slip. That specific information on the reporting needs has not yet been made public by the government. It presumably will be before the end of the year.

So in either a BIA or CCAA insolvency business restructuring, the CEWS should be shown as:

  • revenue in any cash flow statement prepared with anticipated receipt dates;
  • income for accounting and financial statement purposes; and
  • disclosed in the Trustee’s/Monitor’s reporting to stakeholders.

If it turns out that the employer involved in a formal restructuring did not qualify for a CEWS payment for one or more of the periods that it applied and received one, then it is a liability to the government. How is that handled in the restructuring? There could be two answers. From my research, I do not see this specifically being addressed.

You may need to return all or part of the CEWS you have actually already received if you:

  • send to the Canada Revenue Agency (CRA) any type of modifications to a previous application;
  • terminate an application;
  • made a calculation or data mistake for a claim;
  • learn you do not qualify after getting a subsidy payment for a claim made; or
  • receive a notice from the CRA that, following an evaluation, your claim has actually been lowered or disallowed.

Any type of CEWS overpayment you received that is not returned will be subject to interest charges. In the very next insolvency Canada section, I discuss what kind of liability a CEWS overpayment would be in a formal insolvency restructuring.

Insolvency Canada: What kind of liability is a CEWS overpayment

The CEWS is a subsidy payment made to you by CRA based on an application the insolvent company makes. Unlike a claim for unremitted source deductions or HST, it is not an amount the insolvent company collected, held in trust for and failed to remit to CRA. So as far as I am concerned, it is not a trust claim. It would be an ordinary unsecured claim.

The overpayment claim may not necessarily be caught in the restructuring. If the insolvent company applied for the CEWS AND received the subsidy payment BEFORE making the restructuring filing under either the BIA or CCAA, then I believe it would be an ordinary unsecured claim in the restructuring. However, if the company applied for the CEWS AFTER filing for restructuring, regardless of the claim period, the overpayment claim would be a post-filing claim and not caught in the restructuring. All of the overpayment would have to be repaid notwithstanding the formal restructuring.

If not repaid, presumably CRA would offset any other amount payable to the company, such as for HST input tax credits, against the CEWS overpayment liability in such an insolvency Canada situation.

Again, I caution that none of this appears in the CEWS legislation. It is my opinion based on my experience and the review of the relevant legislation.

Insolvency Canada summary

I hope you have found this Insolvency Canada CEWS Brandon’s Blog interesting and helpful. The Ira Smith Team family hopes that you and your family members are remaining secure, healthy and well-balanced. Our hearts go out to every person that has been affected either via misfortune or inconvenience.

We all must help each other to stop the spread of the coronavirus. Social distancing and self-quarantining are sacrifices that are not optional. Families are literally separated from each other. We look forward to the time when life can return to something near to typical and we can all be together once again.

Ira Smith Trustee & Receiver Inc. has constantly used clean, safe and secure ways in our professional firm and we continue to do so.

Income, revenue and cash flow shortages are critical issues facing entrepreneurs, their companies and individual Canadians. This is especially true these days.

If anyone needs our assistance for debt relief Canada COVID-19, or you just need some answers for questions that are bothering you, feel confident that Ira or Brandon can still assist you. Telephone consultations and/or virtual conferences are readily available for anyone feeling the need to discuss their personal or company situation.

The Ira Smith Trustee Team is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.

Categories
Brandon Blog Post

WHEN ARE 2019 TAXES DUE CANADA: 4 AMAZING WAYS TO CRA PERSONAL DEBT RELIEF

The Ira Smith Trustee Team Is Absolutely Operational And Ira, In Addition To Brandon Smith, Is Readily Available For A Telephone Consultation Or Video Meeting.

When are 2019 taxes due Canada introduction

I have noticed recently that Canadians are searching online the question “when are 2019 taxes due Canada“. That leads me to believe that many people are unclear about the changes this year. Some people are searching because they don’t want to miss the payment deadline. Others may be searching because they want to know when the deadline is that they are going to miss because of the COVID-19 pandemic has hit them right in the wallet or purse.

The purpose of this Brandon’s Blog is to go over for individuals:

  • the important tax filing and payment dates for 2019 taxes;
  • what needs to happen on those dates and what if you can’t make it on time; and
  • ways you can deal with Canada Revenue Agency (CRA) to eliminate your tax debt

I remind you that I and my Firm are not personal or corporate tax advisors. We are licensed insolvency trustees. This Brandon’s Blog is not meant to be income tax advice or to replace professional income tax advice. To learn when are 2019 taxes due Canada for your personal situation, contact your own professional income tax advisor.

Is the Tax Deadline Delayed for 2019 Tax Returns?

You may have wondered how COVID-19 influences the filing of your 2019 tax return, repayment of any income tax owing and your tax obligations generally in terms of deadlines, or payments or refunds and tax credits. Apart from those that are self-employed, the income tax return filing date is usually April 30 of every year.

Identifying the turmoil brought on by COVID-19, the CRA provided most Canadians extra time to submit a 2019 tax return. CRA provided us till June 1, 2020, aside from self-employed people operating as a proprietorship or partnership. For those self-employed people, the filing day remained June 15, 2020, for a 2019 tax return.

So since that due date has passed, nevertheless, this year there might be a technicality as I describe below. The government wants every cent they are owed and they want it in a good time. Thus, there are fines for filing a late income tax return if you have an unpaid tax amount. If you are entitled to a refund or your tax balance is nil, there will be no charges for sending in your return after the deadline date.

Charges for filing your income tax return late when you owe the CRA are levied. The CRA will charge you a late-filing penalty if you file your 2019 income tax return after September 30, 2020 (notwithstanding the actual filing date was June 1), and you owe tax obligation that continues to be unpaid. The fine is 5% of your 2019 tax owing, plus 1% of your income tax owing for each complete month your return was filed after September 30, 2020, to a maximum of twelve months.

So without making you any guarantees, there is a real possibility that if you missed out on the June 1 due date, if you submit and pay on or prior to September 30, 2020, and you do not have any kind of prior years’ late-filing penalty, one may not be levied for 2019.

If the CRA charged a late-filing penalty on your return for 2016, 2017, or 2018 your late-filing fine for 2019 may be 10% of your 2019 balance owing, plus 2% of your 2019 balance owing for each and every complete month your return was submitted after September 30, 2020, to a maximum of 20 months.

So it seems the CRA will forgo arrears interest on 2019 tax obligations related to the specific income tax returns from April 1, 2020, to September 30, 2020. This procedure for your 2019 tax obligation does not terminate penalties and interest on a taxpayer’s account prior to April 1, 2020, to September 30, 2020. It does make it less complicated on a taxpayer’s 2019 tax debt that it will certainly not rise via interest charges throughout this challenging coronavirus pandemic time.

Why file by the June 1 deadline if no payment is due until September 30?

Filing your income tax return on time lessen any negative results on your tax credits and benefits payments. If your 2019 return has actually not been assessed by the CRA, details from your 2018 return will be used to compute benefits as well as credits payments up until September 2020. That will guarantee you continue to obtain vital payments. Nevertheless, without filing your 2019 tax return, you may not be getting exactly the correct amounts you are entitled to.

I doubt you desire any kind of disturbance to benefit payments you get for government programs such as the Canada Child Benefit (CCB) and GST/HST tax credits, as well as amounts from provincial programs that are carried out by the CRA.

By filing a return by the due date, you will lessen this impact. Also, if you are owed a refund, the earlier you file, the earlier it will show up in your pocket. By registering for direct payment, you’ll get your refund quicker.

If you are expecting a tax refund for sure you would certainly want to submit on time. CRA may not chase you for it if you don’t owe them for 2019. Submitting your tax return is the only way to get that refund. Remember, a refund means that you gave too much of your money to CRA during the year. For sure you want it back!

However, registering for a direct deposit could lead to other problems. For more information on that, read my Brandon’s Blog CANADA REVENUE AGENCY LOGIN: MASSIVE CREDENTIAL STUFFING CAUSES MANY PROBLEMS.

When are 2019 taxes due Canada: Are there new deadlines for GST/HST returns and payments as well?

Excellent information for the self-employed as well as entrepreneur small-business owners: while the CRA is not changing the filing target dates for GST/HST returns, it is forgoing late filing charges for returns submitted by the end of June. As for payments, any type of GST/HST installments that are due March 27 through June 2020 can be deferred up until June 30, interest-free.

When are 2019 taxes due Canada: What is the payment date?

The target date to pay amounts owed was initially extended to September 1, 2020. On July 27, the CRA revealed that the payment deadline for a person’s 2019 income tax obligation was additionally extended to September 30, 2020.

There are a few other concerns surrounding the declaring of your 2019 income tax return and the payment of any balance owing that you must understand:

  • Some taxpayers may have received a Notification of Assessment that says the date for settlement is April 30, 2020, or September 1, 2020. If you did get such a notice giving those dates for when are 2019 taxes due Canada, it is now incorrect.
  • On May 15, it was revealed that qualified Canadians who are currently obtaining the GST/HST credit and/or CCB payments will continue to get them up until the end of September 2020. Benefits starting in July 2020 and those arranged for August and September won’t be disrupted.
  • If CRA is unable to evaluate your 2019 return by early September 2020, your estimated benefits and/or credits will certainly stop in October 2020 and you’ll have to repay the approximated amounts that were released to you starting in July 2020.
  • By prolonging the due dates for federal returns and instalments, the CRA is additionally expanding the due dates for provincial/territorial individual returns and instalments. Note that the CRA does not administer the tax system for the province of Quebec.

When are 2019 taxes due Canada: What if I owe CRA and cannot pay it?

If you find yourself to be in a financially challenging situation then you need to take proactive activity. The COVID-19 pandemic has hit Canadians hard. I envision there will be many individuals that do not have the needed cash to pay their 2019 income tax debt by September 30. It is necessary to be proactive and positive since the CRA has special powers.

The CRA does have the capacity to take collection procedures without having to go via the court system. The federal government can garnishee your wages or salary, get the money you have on deposit at a bank as well as freeze your bank accounts. They can also make demand on anyone they think owes you money.

There are 4 ways to CRA personal debt relief:

  • If you are able to, borrow the money you owe and pay it to CRA on or before September 30. I don’t think this option needs any further explanation.
  • Contact a CRA collection officer and make a payment arrangement repayment plan. A payment arrangement is an agreement you make with the CRA. This allows you to agree on a monthly amount to pay that you can afford and then provide CRA with a series of post-dated cheques.
  • Consider filing a consumer proposal to consolidate your income tax and other debts so you can make one manageable monthly payment. Through a consumer proposal, you will pay much less than the total of all your debts.
  • If you cannot see your way to being able to do any of the three options listed above, the final one is to use personal bankruptcy to eliminate your income tax and other debts.

If you are able to make a settlement arrangement you have to maintain the payment plan by making certain your regular monthly post-dated cheques clear the financial institution every single time. Also, ensure that all your returns are filed promptly. If you fail to do any of these things, they can terminate the payment arrangement and begin collection action to recoup the tax debt.

September 30, the date when are 2019 taxes due Canada is coming up fast. If you know that you will not be able to pay that liability, don’t fret and don’t waste time. Give us a call. We will help you put together the best strategy that meets your overall needs.

When are 2019 taxes due Canada: A consumer proposal

A consumer proposal is a government-regulated debt negotiation program submitted with a Licensed Insolvency Trustee (Trustee). The purpose of submitting one is to eliminate problem financial debts to make sure that you can start the process of resuming life debt-free.

It can just be filed with a Trustee. When you sign your papers, they are filed with the federal government. It is a legal process under the Bankruptcy and Insolvency (Canada) (BIA).

This procedure is a lawful arrangement between you and you’re unsecured creditors to eliminate all of your debt by repaying only a part of the debt that you owe. If a simple majority by dollar amount accept the terms you have offered, then your consumer proposal is binding on all your unsecured creditors.

This court-sanctioned procedure enables you to bargain negotiation with your creditors. When you are carrying out your consumer proposal by making your required payments, you must also file your income tax returns as normal. CRA manages your refunds in the normal course. If you owe tax for any time period after the filing date of your consumer proposal, you additionally pay that amount as regular.

In a consumer proposal, you maintain your assets and as long as you make all the required payments you promised to make, nobody can garnishee your salary or earnings. If you have filed a consumer proposal, personal income tax obligations arising before your filing is an unsecured debt. When you have filed CRA can’t take any type of additional action against you, like wage garnishment, or freezing your bank accounts. As the Trustee, we alert CRA once you file as well as advise it to stop any additional action against you.

For further information on how a consumer proposal could work for you, please get in touch with me. If you know that when are 2019 taxes due Canada you will not be able to pay them, give us a shout so we can help put together a plan of attack for you.

When are 2019 taxes due Canada: Personal bankruptcy in Canada

If none of the above ways can work for you, then you will have to consider personal bankruptcy in Canada. Personal bankruptcy should be considered by anyone who:

  • is insolvent;
  • has seen a Trustee who has assessed you and determined that you will not be able to complete a consumer proposal; and
  • owes more than $1,000.

As soon as you become bankrupt you will be required to surrender most assets to the Trustee, other than those that are exempt under provincial law or are fully encumbered. These assets will then be sold and the money gained from the sale of the properties will be dispersed according to the BIA. You may additionally have to pay a part of your earnings to the Trustee for the benefit of your creditors.

Personal tax obligations can be discharged when you receive your discharge from personal bankruptcy. Many various other financial debts will also be released. If you have liability to CRA from being a director of a company, those financial obligations can also be discharged.

If you have actually declared personal bankruptcy, personal income tax debt is an ordinary unsecured financial debt. As soon as you’ve applied for bankruptcy CRA can’t take any kind of additional action versus you, consisting of a wage garnishment or freezing your accounts. We will inform CRA when you file as well as instruct it to quit any additional activity against you to try to collect their debt.

Your spouse will not be affected by your bankruptcy unless your spouse:

  • co-signed a debt;
  • owns assets with you jointly; or
  • has received a transfer of property from you at a time when you owed CRA money.

A creditor can go after your spouse for payment in these circumstances and also he/she will be called to account and pay.

You may also wish to check out our Top 20 personal bankruptcy FAQs. So if you know now that when are 2019 taxes due Canada you will not be able to pay it, consider giving us a call and we can run through your various options and tailor a plan to fit your unique circumstances.

When are 2019 taxes due Canada: Summary

I hope you found this is Canada when are 2019 taxes due Canada Brandon’s Blog informative. The Ira Smith Team family hopes that you and your family members are remaining secure, healthy, and well-balanced. Our hearts go out to every person that has been affected either via misfortune or inconvenience.

We all must help each other to stop the spread of the coronavirus. Social distancing and self-quarantining are sacrifices that are not optional. Families are literally separated from each other. We look forward to the time when life can return to something near to typical and we can all be together once again.

Ira Smith Trustee & Receiver Inc. has constantly used clean, safe and secure ways in our professional firm and we continue to do so.

Income, revenue, and cash flow shortages are critical issues facing entrepreneurs, their companies, and individual Canadians. This is especially true these days.

If anyone needs our assistance for debt relief Canada COVID-19, or you just need some answers for questions that are bothering you, feel confident that Ira or Brandon can still assist you. Telephone consultations and/or virtual conferences are readily available for anyone feeling the need to discuss their personal or company situation.

The Ira Smith Trustee Team is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.

when are 2019 taxes due Canada
when are 2019 taxes due Canada
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Brandon Blog Post

IS CANADA IN A RECESSION: OUR 9 EASY STEPS TO SOLVE COVID-19 INDUCED FINANCIAL PROBLEMS

The Ira Smith Trustee Team is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.
If you would prefer to listen to the audio version of this is Canada in a recession Brandon’s Blog, please scroll to the very bottom and click on the podcast.
is canada in a recession
is canada in a recession
Is Canada in a recession introduction

One question that people are searching online for answers is: Is Canada in a recession? Last month I wrote a blog titled Canada in recession: Will the economy fall into a great depression? In that blog, I described the views of Nouriel Roubini is a world-known economist and a professor of economics at New York University’s Stern School of Business. He has some stark current thoughts on just how bad the Canadian economy can go. I invite you to again read that blog to see what his thoughts are.

That blog accepted the signals that Canada is in a recession. The purpose of this Brandon’s Blog is to take a step back and answer the question: Is Canada in a recession?

Is Canada in a recession? What is a recession?

To begin to answer is Canada in a recession, we first need to understand what a recession is.

A recession is a short-term period of overall economic decline. Economies go via cycles, which implies there are periods of growth as well as durations of decline. The COVID-19 pandemic has actually thrust our economic climate into a decrease, a lot like just how a considerable, unanticipated expense can upend your own household budget plan.

The federal government identifies when our economy has actually entered a recession and when it has left by measuring key economic signals. These signs are sensitive to what happens locally and internationally. They include, for circumstances, declines in various industry sectors, agriculture or manufacturing, and also disruptions to international trade.

The C.D. Howe council defines a recession as a pronounced, persistent, and pervasive decline in total economic activity. It considers both GDP and employment as its major rulers. Is Canada in a recession? It stated that Canada is formally in an economic crisis and recession.

What did some economists forecast about is Canada in a recession

Economists were checking out financial indicators of the health of the Canadian economy near the end of 2019 and very early in 2020 to try and forecast the future. So, what were economists saying about is Canada in a recession?

What some economic experts were predicting prior to the coronavirus pandemic was that they really did not assume we would see one this year. However, on the other hand, last October David Rosenberg, chief economist at Gluskin Sheff & Associates, assumed there would certainly be an 80% chance of an economic downturn coming to Canada this year.

The complete level of its economic impact will certainly not be known for some time. It seems clear to economists that the United States will certainly go into an economic downturn in 2020 if it hasn’t already. Since 1970, Canada has experienced economic crises at roughly the very same time as the USA, showing the interconnectedness of the two economies. So it appears that all of North America is in a recession.

How bad will Canada’s COVID-19 recession be?

Canada is only now seeing the tip of the economic iceberg from COVID-19. It is clear that its economic effect will be like nothing seen since the Great Depression. Economists state the overview for employment and the economic climate will be stark. The only silver lining may be that the deepness and suddenness of the decrease might offer hope for a fast rebound.

As I previously reported, Dr. Roubini thinks there are pressures that not only would make is Canada in a recession, but it could go into a depression! His view is that there is going to be a U-shape recuperation due to the fact that this is an international shock. Both households and businesses will need to invest less and save more. Precautionary savings are most likely to go higher. Income is most likely to be lower. This will convert into much less business capital spending. He claims there will certainly be a worldwide investment slump due to a global savings excess.

How long will this is Canada in a recession last?

The rapid spread of coronavirus led to unprecedented personal, the social, and economic impact that caught the world largely unprepared. Although the government of Canada responded decisively with programs and grants to lessen the economic devastation, the recovery period remains to be seen. And by most indicators, this downturn is looking like a long and steep uphill climb.

If we’re looking specifically at negative growth, then economists anticipate that this trend won’t continue for long. There are 2 reasons:

  • Lockdown mandated by the government. Whatever was closed down by government mandate which takes place much faster than a shutdown due to economic issues.
  • Government bailouts. The government is supporting the whole economy. Yes, we’ll need to pay back the government in taxes eventually yet that can only occur when the economy is recovering. This suggests that economic growth will certainly be slower.

Parliament budget officer Yves Giroux believes that the Canadian deficit this year will strike $256 billion, consisting of a 6.8% decline in economic development, the most awful showing since the 1981-1982 economic recession.

Is Canada in a recession? Are there any predictors of a recession recovery?

Indicators like stagnant salaries, low home financial savings, as well as high consumer financial debt, don’t predict economic crises, yet they do forecast just how challenging the healing will be when an economic downturn hits. Below are some signs and symptoms that can indicate a recession:

  • the surge in joblessness;
  • an increase in bankruptcies;
  • defaults or repossessions;
  • the falling rate of interest;
  • reduced consumer spending;
  • decreased consumer confidence; and
  • falling asset prices.

A healthy and balanced labour market as well as a turnaround in the housing sector helped the Canadian economy expand at a modest rate in 2019. This supports the contention that in order to come out of an economic downturn, companies and consumers need to feel confident to invest and spend.

What can you do when is Canada in a recession

If you believe the answer to the question is Canada in a recession is yes, after that there are several things that you can do. I have written on these problems before under several headings such as financial literacy, household debt and the benefits of having an emergency savings fund on hand in case of, well, an emergency situation.

You can’t regulate the country’s economic climate, yet you can control your very own. Every person requires to take a look at:

  • Using this time to examine your overall household budget and figure out some practical yet difficult goals for your cash.
  • This is the time to live according to your emergency situation budget and look at what your typical spending plan will certainly resemble once you are back to work.
  • Consider your typical budget based upon what it looked like before COVID-19 hit and the insights you’ve gotten around your spending behaviours since you’re living more frugally.
  • Making a plan to eliminate credit card debt. Try to find a no or extremely reduced rate of interest balance transfer charge card to transfer the balance to if you have some credit card financial debt lingering around.
  • A strategy to include a savings element in your family budget will aid to shield you when you face a reduction or a full loss of your earnings.
  • Dealing with the pandemic as a wake-up call to recession-proof your funds. If your income was impacted by the pandemic, what length of time could you have survived had the government, banks and other financial institutions and different corporations not actioned in with procedures to get cash back into your wallet through deferrals?
  • Can you work at a couple of jobs that amount to providing you with a full-time revenue? This might first take some efficient networking before you can discover the appropriate mix of work.
  • Have an emergency fund all set up. It will go a long way to helping you weather a recession.
  • No matter your current scenario, the very best way to recession-proof you and your family is with an emergency savings account.

In the post-COVID years, there is a likelihood that lenders will be stingier with exactly how much cash they loan to customers. So guarantee that your budget permits constant debt repayment when you resume a stable income that resembles your pre-coronavirus income level.

That is exactly why it is crucial to focus on your financial situation now and take steps to guarantee your long-term personal financial stability.

Is Canada in a recession summary

It certainly feels that way. I hope you found this is Canada in a recession Brandon’s Blog informative. The Ira Smith Team family hopes that you and your family members are remaining secure, healthy and well-balanced. Our hearts go out to every person that has been affected either via misfortune or inconvenience.

We all must help each other to stop the spread of the coronavirus. Social distancing and self-quarantining are sacrifices that are not optional. Families are literally separated from each other. We look forward to the time when life can return to something near to typical and we can all be together once again.

Ira Smith Trustee & Receiver Inc. has constantly used clean, safe and secure ways in our professional firm and we continue to do so.

Income, revenue and cash flow shortages are critical issues facing entrepreneurs, their companies and individual Canadians. This is especially true these days.

If anyone needs our assistance for debt relief Canada COVID-19, or you just need some answers for questions that are bothering you, feel confident that Ira or Brandon can still assist you. Telephone consultations and/or virtual conferences are readily available for anyone feeling the need to discuss their personal or company situation.

The Ira Smith Trustee Team is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.

 

Categories
Brandon Blog Post

CCAA CANADA: OUR EXTRAORDINARY GUIDE TO 2020 TROUBLED CANADIAN COMPANIES SEEKING BANKRUPTCY PROTECTION

ccaa canada
ccaa canada

The Ira Smith Team is totally operational and both Ira and Brandon Smith are here for a telephone consultation, conference calls and virtual meetings.

Keep healthy and safe everybody.

If you would prefer to listen to the audio version of this Brandon’s Blog, please scroll to the bottom and click play on the podcast.

CCAA Canada introduction

We are now about 5 months into this COVID-19 pandemic since the state of emergency was announced in Canada. There has also been a lot of media coverage of the many negative effects it has had on Canadians and the Canadian economy. I thought it might be interesting at this point to do some review on CCAA Canada. Now I am not talking about the Canadian Collegiate Athletic Association. Rather, I am going to look at the companies that have so far filed for creditor protection under one of Canada’s insolvency statutes. The Companies’ Creditors Arrangement Act.

When a company tries to reorganize under CCAA Canada – What does CCAA mean?

When Canadian companies who owe more than $5 million experience financial problems, they might go to court to seek creditor protection, filing under the CCAA Canada. That’s federal legislation that primarily offers a company time to try to work out its financial troubles with those to which it owes money.

As I have written before in various Brandon’s Blogs, if the company owes less than $5 million it can file under the Part III Division I reorganization section of the Bankruptcy and Insolvency Act (Canada). Although it is the other Canadian federal insolvency statute and some procedures are more streamlined and handled slightly differently, the net effect is the same as the matters I explain below about the CCAA Canada.

What does CCAA Canada protection mean? CCAA vs Chapter 11

“Bankruptcy protection” is a term closely associated with a US company filing under Chapter 11 of the US Bankruptcy Code. That term has been adopted into the Canadian insolvency dialogue. In Canada, it most likely means that the Canadian company has applied to a Canadian court to look for protection from their creditors by filing under CCAA Canada.

A firm files under CCAA Canada for consent to come up with a restructuring plan strategy that would certainly provide it time to rearrange its financial affairs to make sure that it can keep operating.

As long as a CCAA order continues to be in place, creditors are not allowed to start or continue any kind of action to recover money owed to them. They can’t try to confiscate the firm’s property or try to petition it into bankruptcy, without the prior approval of the court. This is called the CCAA stay of proceedings.

Considering that a CCAA Canada filing is made because a business is deeply in the red, the initial order of business is to strike some kind of satisfactory arrangement with its creditors. That includes secured creditors, unsecured creditors and shareholders.

Can CCAA Canada protection be extended?

Yes, under CCAA Canada, court-ordered protection can be extended. After Algoma Steel filed under CCAA Canada in April 2001, the firm had gotten eight extensions prior to emerging with a new ownership framework.

Who gets priority under a CCAA Canada filing?

Not all creditors are treated equally. There is a priority generally established for the ranking of creditors and the order in which they might be paid by a debtor.

First in a CCAA Canada restructuring, will be any government claims that rank as a priority deemed trust claim. Next will be any new charges ordered by the court as part of the restructuring. Examples of such court-ordered security charges are Key Employee Retention Plans, financing the company needs in order to survive during the restructuring period and the costs of the professionals involved in the restructuring for the company.

Secured creditors, including lenders and bondholders, usually head the list next when it concerns getting back their money. Secured creditors might hold security such as a general security agreement and/or a mortgage as security for their debt held.

Unsecured creditors follow next on the list of creditors. Unsecured creditors have supplied goods or services on credit to the company without being given any security. In the many retailer filings that have been in the news recently, even customers who have paid deposits for items not yet picked up or who have gift cards are also unsecured creditors. Last on the list are the shareholders.

What happens if the court doesn’t approve a CCAA Canada application or the sides can’t agree on how to restructure debt?

If a restructuring effort is not successful, or if the court does not approve it, a company can be placed right into receivership or bankruptcy. The main difference between a CCAA Canada filing and the options of receivership or bankruptcy, suggests that the company can no longer be a going concern and will be liquidated.

The choice between receivership or bankruptcy depends on the nature and extent of the creditors. If there is a major secured creditor who is owed more than the assets are worth, on a failed restructuring, the court will allow that secured creditor to appoint a receiver (or the court will appoint the receiver). The receiver will then liquidate the company’s assets and repay the secured creditor as much as possible. If there are no secured creditors (which is highly unusual), or there will be money left over from the liquidation after full repayment of the secured creditors, then there will be bankruptcy. The licensed insolvency trustee acting as the bankruptcy trustee will make a distribution to the unsecured creditors.

Sometimes the type of company or industry will require both receivership and bankruptcy. Retail liquidations are a good example. The reasons are outside the main topic of discussion for this CCAA Canada Brandon’s Blog, but, one day, I will do one on that topic.

What happens to shareholders in a CCAA Canada restructuring?

Holders of common stock generally come last. On a regular basis in a CCAA Canada restructuring, they tend to get wiped out. Their old shares come to be worthless. Usually, brand-new shares are issued in the restructured company.

Holders of preferred shares rank ahead of common shareholders (for this reason the title “preferred”) yet more often than not do not get back the full value of their shares.

Public company shares in a company if it enters CCAA Canada protection and all trading is halted

When a public company announces that it has filed under CCAA Canada, a trading halt is applied. The listing exchange notifies the marketplace that trading is not taking place. While the stop is in effect, brokers are forbidden from publishing quotations or signs of interest in trading. The listing exchange will end the trading stop by taking the actions called for by its rules. Generally, the marketplace is alerted that a trading halt is about to end either at the same time the halt finishes or a few minutes before.

When a company gets on the edge of bankruptcy, its stock value mirrors the danger of a CCAA Canada administration becoming liquidation. Purely as an example, a business that used to trade at $50 might trade at $2 per share as a result of the bankruptcy environment. After entering into a CCAA Canada filing, the company’s stock price might be up to $2.10. This value is composed of the potential amount that shareholders might get after liquidation and also the possibility that the firm might restructure and run effectively in the future. Investors can buy and sell these $2.10 shares in the market. The actual value does not reach zero unless the likelihood of restructuring is so low that liquidation becomes a certainty.

While the company is in a CCAA Canada restructuring, its stock will certainly still have some value, though it will likely plummet. The regulatory authorities will watch it very closely and shut down trading if any anomalies are encountered where investors could get hurt. This was recently seen in the United States in the Hertz Chapter 11 bankruptcy protection administration.

Nonetheless, if the business restructures and emerges from CCAA Canada reorganization as a solvent going-concern, its share price might start to rise again. How much will depend on the unique restructuring issues. If a business rises from its restructuring stronger than ever, investors can take advantage of the turnaround, as old stock may get cancelled during the insolvency process, and new shares issued.

List of CCAA filings under CCAA Canada during the COVID-19 pandemic so far?

There have been many media reports about companies filing under CCAA Canada during this coronavirus pandemic. I thought it would be useful to look at which companies have filed and what industries seem to be most affected between the calling for the state of emergency and the last date for which these statistics have been published, July 31, 2020. All of this information comes from statistics published by the Office of the Superintendent of Bankruptcy Canada.

The number of companies and the industries that these companies engage in is allocated as follows:

Cannabis6
Charity1
Construction4
Energy4
Entertainment1
Hospitality1
Manufacturing1
Media1
Mining2
Pulp and Paper1
Real Estate2
Retail8
Technology1
Travel1
34

 

The following chart shows the filings by the province in this same time frame:

ccaa canada
ccaa canada graph

CCAA Canada summary

I hope you enjoyed this CCAA Canada Brandon’s Blog. The Ira Smith Team family hopes you and your family are staying safe, healthy and well-balanced. Our hearts go out to every person who has been affected either through inconvenience or personal family tragedy.

We are all citizens of Canada and we have to coordinate our efforts to stop the spread of the coronavirus. Social distancing and self-quarantining are sacrifices that are not optional. Family members are literally separated from each other. We look forward to the time when things can return to something close to normal and we can all be together again physically.

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Revenue and cash flow shortages are critical issues facing entrepreneurs and their companies and businesses. Should you take advantage of the CEBA? I say a resounding YES!. I just wanted to highlight all of the issues that you should consider.

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